The above is a chart showing the effective Federal Funds Rate from 1954 to the present. It came from the Federal Reserve, and essentially shows not the rate the Fed was aiming for, but the actual rate that was effective. You may think of it as the rate banks borrowed from the Fed in order to do their job of "creating money".
50+ years is a long time, lots of things happen, lots of people come and go, lots of opinions and ideologies are born or sink into desuetude...yet the chart is very much an inverted "V": it slopes to a maximum, then slopes back down. It is not random, or - rather - it has randomicity within the basic pattern of an inverted bowl.
I invite you to gather all the explanations of all the learned economists, diligently gather them: articles, opionions, and video interviews; put them in a sack, drive out 50 miles into the county, throw the sack into a field, and I'll bet you those explanations will get back home before you do!
The chart illustrates my Narrative of America and The Depression and World War II: the enormous impetus of the end of the War required to be reined in up until the 1980s; after that, it was a different story.
The War did not end the Depression; the way the War ended ensured the end of the Depression.
It was not the spending in the War; it was the set of particular circumstances at the end of hostilities:
The Depression and War created a group of people who were uniquely bred under the threat of deprivation, and the threat of death or enslavement to tyranny. They weren't perfect, but they were fighters.
The War lasted just long enough; it created a certain set of attitudes, and it did not drag on to mutually exhaust the combatants. If it had exhausted even the victors, quite a different history would have played out.
The War devastated just thoroughly enough that the victors could embark on massive rebuilding of the devastated areas, thus creating a enormous economic boom of real goods.
The War engendered a dangerous stand-off called the Cold War, which called for sustained levels of investment in weapons, infrastructure ( the inmterstate highway system, for example ) , education ( the response to Sputnik ), the exploration of space, and other areas seen essential to endure in and "win" in this Cold War. Yet, this Cold War never did turn into a nuclear holocaust. The participants remained essentially loyal to Humanity, and they did not destroy the plant - one of the greatest moral victories of mankind.
This boom peaked in the inflation of the early Reagan years: this was the acme of the effects of WW II. Ever since then, we are declining. Even the Electronic Boom of the 1990s called forth only enough heated inflation to warrant a relatively minor Fed correction...but by this time, we were all about creating asset booms anyway, even though we didn't call them that.
Ever since Reagan - whose Vice President, George H.W. Bush was a WW II veteran and would be the last of the WW II era to be president - we have been acting in a role that did not suit us, and was beyond our means. We always draw parallels between us and Rome, but infallibly we draw the wrong parallels, for the period of time of which we speak we should speak of Rome in the wars with Carthage, and Rome thereafter, as we read in Polybius
...when a state, after having passed with safety through many and great dangers, arrives at the highest degree of power, and possesses an entire and undisputed sovereignty; it is manifest that the long continuance of prosperity must give birth to costly and luxurious manners, and that the minds of men will be heated with ambitious contest, and become too eager and aspiring in the pursuit of dignities. And as these evils are continually increased, the desire of power and rule, and the imagined ignominy of remaining in a subject state, will first begin to work the ruin of the republic; arrogance and luxury will afterwards advance it: ...
For then, being with rage, and following only the dictates of their passions, they no longer will submit to any control, or be contented with an equal share of the administration, in conjunction with their rulers; but will draw to themselves the entire sovereignty and supreme direction of all affairs.
Dido Builds Carthage
Pop Quiz Question for Baysage: the period of time from 1954 to the maximum at approximately 1984 is 30 years, give or take 2 years. What is the date 30 years forward from the maximum? Give your answer +/- 2 years.
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